Before it makes changes to the rule spelling out the policies and procedures banks must have in place to collect beneficial ownership information for their small business customers, the Financial Crimes Enforcement Network needs to accurately calculate the burden that collection currently places on financial institutions, and to consider the parts of the existing rule that work and those that do not, the American Bankers Association said Friday in a letter to the agency.
FinCEN is currently seeking to renew without change existing BOI collection requirements for legal entity customers. In its letter, ABA said it supports the goals of the data collection, but it wanted to use the opportunity to alert the agency to issues surrounding an anticipated revision of the customer due diligence, or CDD, rule. Among those things, the agency massively undercounts how much time it takes for banks to comply with BOI collection requirements, the association said. The agency also now directly receives BOI on small business reporting companies from those entities, which it plans to share with banks, “so those aspects of the CDD rule that require banks to collect similar duplicative information should be reassessed.”
“Finally, as FinCEN contemplates revisions to the 2016 CDD rule, it is essential that FinCEN understand the aspects of the CDD rule that work as intended—to further [Bank Secrecy Act] purposes—and those that do not, by requiring banks to depart from a risk-based approach to BSA compliance,” ABA said. “As just one example, the CDD rule mandates collection requirements at virtually all account openings, regardless of legal entity risk profile or whether the legal entity is already well known to the bank.”
